Walmart's Got an Image Problem

While Ikea was raising wages, Walmart was defending its low-pay policy.

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Just as Ikea was getting a load of good press this week as the latest low-wage retailer to give its employees a decent raise, Walmart (NYSE:WMT) was still explaining why its existing pay scale works just fine.

In fact, the country's biggest employer was getting fairly defensive as it explained the logic behind its pay scale. So defensive that you have to wonder why it doesn't just bow to the inevitable and pay its employees better instead of pouring all that public-relations energy into explaining why it can't or won't do that.

I say the shift to higher pay is "inevitable" because nine of the 50 states have already passed increases in their state minimum wages this year, and 38 are considering doing so. When the debate over a federal minimum wage died in Congress, the political pressure went local, particularly to cities and states with a high cost of living.

Walmart could anticipate the trend by a few months and look great.

That's what Ikea did. The happy news from the Swedish retailer is that it will raise the minimum average hourly wage it pays employees in its US stores to $10.76. That will mean an average 17% raise for those workers, starting January 1. Ikea management said it does not expect to have to increase prices to pay the higher wages.

Ikea's starting wage will be based on a regional "living wage calculator" that estimates the minimum income needed for a single person without children to survive. So, Ikea workers won't exactly be rolling up to those superstores in BMWs, but they will be eating regularly.

Another big retailer, Gap (NYSE:GPS), also recently announced a decision to raise its salaries, starting with increases this month to at least $9 an hour and a second increase, to $10, in June 2015. Starbucks (NASDAQ:SBUX) didn't announce a wage increase, but it introduced a college tuition plan for its employees, and urged other companies to look at the total compensation picture in considering positive changes.

At the same time, Walmart is in the news for defending itself against an opinion column by writer Timothy Egan in the New York Times in which he called Walmart "a net drain on taxpayers, forcing employees into public assistance with its poverty-level wages."

Walmart responded vigorously on its company blog, with a "Fact Check" (see image) of Egan's column in which it insisted that Walmart is not, in fact, a net drain on the American taxpayer.

Predictably, conservative writers called Walmart's response "epic" and "devastating." Equally predictably, a writer for the Huffington Post, Mark Gongloff, called it "Mostly Bullshit."

The question is whether Walmart is shooting itself in the foot by arguing on the losing side. The company is ignoring, or disputing, a strong and widespread concern among economists as well as the general public that low-wage jobs are undermining America's economy and the health and well-being of its working population.

In his column, Egan noted that Walmart had a disapproval rating of 28%, according to a recent poll by Lake Research Partners. Walmart responded that it is "pretty sure any corporation, politician even media outlet would like to have a 72% favorability rating." (The odd punctuation is deliberate. The Walmart response is cleverly handwritten to look like an editor's margin notes.)

In fact, the survey by Lake Research Partners shows Walmart has by far the highest disapproval rating of any major American retailer. Target (NYSE:TGT) scored a 13% disapproval rating, followed by Costco (NASDAQ:COST) at 6%, and Amazon (NASDAQ:AMZN) at 4%.

The survey concluded that, "An important share of consumers do not believe Walmart treats their employees well. This affects how they feel about Walmart and their willingness to shop there." In addition, it said that the company's pay and treatment of workers is "leading even some of its most loyal customers to consider avoiding the store."

Walmart's slogan is "Save Money. Live Better." Very effective, if it proves that its employees can live better, too.

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